Covid-19 has exposed private sector investment opportunities
The Covid-19 pandemic has destroyed livelihoods and millions of jobs around the world. The International Labour Organisation estimates that nearly 1.6 billion people’s livelihoods are now threatened, with the greatest impact being felt by those in the informal sector.
However, the pandemic has also brought to the fore numerous opportunities in that the private sector can now harness.
The United Nations’ Food and Agriculture Organisation estimates that about 40 per cent of the food in sub-Saharan Africa perishes before it reaches the consumer. In Uganda, there is a growing production of fruits and vegetables but most of it is going to waste due to the absence of storage facilities.
Due to lack of cold chain solutions in Uganda, most crops are seasonally available with price variations between peak harvest and low season reaching up to 400 per cent.
Investment in cold storage will require temperature-controlled cold storage warehouses and transportation services for which affordable long-term debt financing and private equity will be critical for those without ready capital.
The pandemic has eroded the traditional marketing systems and it may take years to return to the practices we have all be been accustomed to. However, farmers and buyers need to quickly connect for trading to happen. This is what is going to drive the popularity of marketplace applications.
Market place platforms are going to slowly replace the traditional market systems and we could see many digitally literate young farmers adopting and using them.
A consultative group to assist the poor survey in 2016, indicated that about five per cent of smallholder farmers in Uganda have a smart-phone and this number has been growing with young farmers. This could be a good place to start.
During the lockdown, boda boda and small cargo trucks have helped people access supplies. Even though these have played a big role, they remain informal, disorganised, and less professional.
There is great opportunity in building distribution leveraging the already existing infrastructure of boda bodas. Although companies such as Safe Boda and Uber have invested heavily in this area, there is still a huge opportunity, especially outside of Kampala.
The lockdown disrupted movements and cut off supply chains for fresh vegetables and fruits, among other products. Many people turned their backyards into gardens to meet the growing demand.
At the height of the lockdown, government distributed food to urban families, especially in Kampala.
However, there was a lot of outcry from the public over ‘dirty’ and poorly sorted beans.
This did not only start with the pandemic but for many years, most foodstuffs such as beans, maize, rice have been poorly sorted.
In fact, in a kilogramme of beans you buy in a retail shop, about 3-5 per cent will be stones and sand partly due to poor post-harvest handling.
Investment in this area will require services that enable agri-business traders to clean produce, sort, and package.
Even for smallholder farmers, these services can be offered at an aggregate level.
The agricultural sector is full of opportunities throughout the value chain of various enterprises, private sector players need to be strategic is spotting and harnessing these opportunities.
Mr Were Nathan is a Financial Inclusion Specialist